Federal government poised to raise nuclear liability cap

Federal Natural Resources Minister Joe Oliver is set to roll out a plan to raise the liability cap that Canadian nuclear operators would have to pay in case of an accident, The Canadian Press has learned. (Pat Sullivan/The Associated Press)

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Federal Natural Resources Minister Joe Oliver is set to roll out his plan to raise the amount in damages that Canadian nuclear operators would have to pay in case of an accident, the Canadian Press has learned.

He is expected to announce the details at a nuclear conference in Toronto on Monday morning, although he will likely hold off on tabling legislation until the fall.

The liability cap is now set at $75 million but that is widely considered outdated, especially in the wake of the 2011 Fukushima disaster that has led to tens of billions of dollars of damage claims.

The federal Conservatives have put forward legislation several times in the past that would have increased the liability cap to $650-million, while also giving the minister leeway to increase the cap in the future. But the bills have failed at least three times.

Oliver is not expected to actually table legislation on the new cap until this fall, in order to avoid having the bill fail yet again if the prime minister happens to prorogue this summer.

However, Oliver has said publicly that he was making plans to increase the liability cap for both the nuclear industry and the offshore oil industry. But Monday's announcement is likely to focus just on nuclear.

His officials had no comment.

Unlimited liability?

Documents obtained by Greenpeace earlier this year showed that this time, Ottawa was contemplating raising the liability cap somewhat higher than $650-million.

Environmentalists want unlimited liability, but nuclear proponents say that would be incentive for a company involved in an accident to declare bankruptcy and walk away, leaving governments on the hook.

"Recent developments may warrant that the amount of $650-million be re-examined," the government consultation paper states, pointing to expenses involved in the Fukushima accident and the 2010 oil spill in the Gulf of Mexico, as well as moves by other countries to significantly increase operator liability.

International norms have shifted since the $650-million cap was last proposed, the paper says.

"Consideration must be given as to the appropriateness of retaining the $650-million operator liability limit, or moving to a higher limit or unlimited liability," the paper states, adding that the nuclear insurance pool in Canada is already big enough to cover up to $1-billion in operator liabilities.

Canadian nuclear operators have not opposed raising the limit. Rather, the discussion has been around how to pool resources to create a substantial insurance fund, and how to do that gradually so as not to shock the bottom line.

The document suggests Ottawa has not seriously considered unlimited liability.

"Even if an operator has significant assets, allowing a power utility to become insolvent may not be in a country's best interests," the paper states in a footnote, pointing to the Japanese government's need to inject public money into the Fukushima utility so that it wouldn't collapse due to compensation claims.

But critics say anything except unlimited liability acts as a subsidy to the nuclear industry.

"Increasing the cap only decreases the subsidy; it does not eliminate it. The government of Canada should proceed with legislation that removes the liability cap entirely rather than legislation that maintains it, or increases it to be harmonious with other jurisdictions," wrote Joel Wood, a senior research economist at the Fraser Institute, in a 2011 analysis.

In February, the federal government introduced new financial penalties for companies found in violation of the law in an effort to increase pipeline safety.